Board Member Proxy - Maryland

Started by KA4 • 11 replies • 1345 views

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KA4 (Maryland)
Posts: 3

Posted:

I have had a fellow board member assign a proxy for a board meeting (third party, not another board member). Most of what I'm finding says that it is not permitted in Maryland law, but I can't find the specific law that states it. Our bylaws and ccrs say nothing about it. Any direction would be fantastic! Thanks!

RichardP13 (California)
Posts: 3,868

Posted:

Any laws or regulations I have seen do not allow a director to vote by proxy at a meeting. If you are not there, you have NO vote or say in the discussion.

KA4 (Maryland)
Posts: 3

Posted:

I was just hoping to find a specific reference so they would not fight me on it. I've had a hard time finding that. Even if it were legal it's pretty shady imo.

RichardP13 (California)
Posts: 3,868

Posted:

While the reference below is for California, there is also a reference to Robert's Rule of Law.

https://www.davis-stirling.com/HOME/Director-Proxies

JohnC46 (South Carolina)
Posts: 14,265

Posted:

The result of a simple Google search:

See Question 15:

https://www.caionline.org/Advocacy/StateAdvocacy/Laws/Documents/CCAL%20MD.pdf

KA4 (Maryland)
Posts: 3

Posted:

It says "Maryland statutes do not allow the use" but I was unable to find where this comes from specifically. This is the document that set me on the search for it, but I'm on mobile so perhaps I missed a link to the actual statute?

KerryL1 (California)
Posts: 14,550

Posted:

I think most rely on Robert's Rules of Order. You are right, btw, no proxies permitted for board members.

PestyonE
Posts: 18

Posted:

It may actually be a state by state issue.

Arizona - permitted if allowed by bylaws

Nevada - not permitted because 'not specified'

California - not permitted

https://www.bing.com/search?q=director+vote+by+proxy&form=IE10TR&src=IE10TR&pc=EUPP_CMDTDFJS

One (of many) opinions:

Whether incorporated or unincorporated, it is well settled that corporation directors generally cannot vote at directors' board meetings by proxy but must be personally present and act themselves.

This requirement is for good reason. Directors are expected to stay informed to fulfill their fiduciary duty. To do that they must be present. A director's personal judgment is necessary, and the duties cannot be delegated or the powers assigned. Because it is so obvious, no cases contradict this concept.

One leading case decided in 1893 and still good law today, Ohio National Valley Bank vs. Walton Architectural Iron Co., said a director of a corporation cannot vote by proxy at a meeting of the directors. That holding was confirmed 63 years later in Greenberg vs. Harrison (1956), which said a corporate director must be physically present at directors' meetings and cannot vote by proxy.

A proxy is defined as a device for use by shareholders to enable another to vote his or her "shares." Association directors don't vote "shares."

Therefore, homeowner association directors cannot vote a proxy at a board meeting or use a proxy to establish a quorum.

The only thing that will change the president's mind about whether to accept an attorney's advice is when a board action that relies on that advice subjects the homeowners and the board to liability. The board of directors may want to request a refund for advice that is wrong.

GenoS (Florida)
Posts: 4,276

Posted:

Florida specifically says directors may not vote by proxy at a board meeting.

KerryL1 (California)
Posts: 14,550

Posted:

Good cites, oh, Pesty1.

TimB4 (Tennessee)
Posts: 21,061

Posted:

KA4,

Expecting your Association is incorporated, MD corporate law would apply.
Per § 2-408. Action by directors:

(a) Majority rule. -- Unless this article or the charter or bylaws of the corporation require a greater proportion, the action of a majority of the directors present at a meeting at which a quorum is present is the action of the board of directors.

Note: it says the action of a majority of the directors present at a meeting. It does not say a majority of the directors or their proxy. . .

I believe that this statute would be what you are looking for.

Per Montgomery County Department of Housing and Community Affairs [emphasis added]:

It's not uncommon for a board member to give his or her proxy to another board member to use at board meetings.Few question this practice, but it is quite often illegal or in violation of the governing documents, and can invalidate a board decision.Your community's attorney can tell you if that practice is legal in your community.

BenA2 (Texas)
Posts: 1,273

Posted:

I think the reason you are not finding it is that proxy voting is an exception to the rule. So, the only reason to put it into law, or your governing documents, is if it IS allowed. So, if the rules say that directors vote on issues, it goes without saying that they cannot delegate that vote to someone else. That's not to say that some states don't explicitly prohibit it.

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